Portugal's economy minister looks to an open future

Portugal’s minister of economy, Manuel Caldeira Cabral, tells Natasha Turak how increases in exports and tourism have driven the country’s growth, enabling it to reduce its fiscal deficit and unemployment levels, while its open approach has prevented protectionist sentiments from taking hold within its borders.

Q: Portugal’s economy has recorded 13 consecutive quarters of growth, unemployment is falling, and the country has reached its lowest fiscal deficit in 40 years – 2.1% of GDP – without the use of austerity measures. What policies do you credit for this?

A: What we did was employ moderate and balanced policies that allowed the economy to expand faster – such as restoring income to workers, but also encouraging private investment and exports. So we ended up with growth accelerating, posting this year’s first-quarter growth well above that of the EU.

We managed to do that through a mix of growth in internal demand – consumer confidence – and improved investor confidence. But very important was a double-digit increase in exports in the beginning of 2017 – 13% in the first two months. We took unemployment below 10%. It is still quite high, about 9.9%, so we still have work to do. But importantly, we decreased unemployment by job creation, not by people leaving the country.

Q: In what sector have you seen the most significant growth?

A: We’ve had several very good years for tourism. We grew 40% in the past five years in terms of tourists, and double-digit growth attracts investment – which is very good because it’s an area where we want to grow with quality. People are finding the country very competitive in terms of quality of life, hotels and prices. Last year, we had a 10% increase in the number of tourists but 17% in revenues, which means we are growing in different scopes of [tourism], especially in the high-quality luxury area, which means more and more people are valuing the destination and the Portuguese brand.

Portugal achieved the second highest job creation in Europe, which means companies are confident, we are on the radar of foreign investment, and foreign investors are looking at Portugal’s qualified young generation as an opportunity to expand – either by new greenfield investment or by shared services, etc.

Q:The wave of anti-EU and protectionist sentiment sweeping much of Europe has concerned many leaders. Do you think Portugal is vulnerable to this trend?

A: The simple answer is no. The impact of the financial crisis was quite strong in Portugal, and in the peak of the crisis, when unemployment hit 17%, we didn’t see people moving to populist or radical parties. What you find in Portugal is that people are very open, and I think the reaction of the country was to stick together.

There was a lot of resilience in the country in accepting the sacrifices we have had to make, and we are quite proud of what we’ve managed to achieve: a more balanced country, a country that foreign investors trust, but also a country that maintained its social cohesion and didn’t go for radicalism. We want to remain open – open for trade, for investment, for anyone that wants to visit us, and we always work to welcome people. This is something we are proud of in our culture.

Q: How do you see your role within the EU, and more broadly, the EU’s role in the world?

A: We want to have a constructive role in European reconstruction, and I think that Europe should work to become a beacon of openness in the world. In a time when other parts of the world are having doubts about being open or closed, Europe should give a very affirmative answer, saying that we want to be open, we want to be part of world trade, and we want to work constructively with the world in creating new agreements that continue this path that we’ve been on for the past 50 years – a path that has brought development to different parts of the world.

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